Abstract

This dissertation contributes to the global political economy of finance by examiningthe historical evolution of the German financial system. The origins of Germany’s nonmarketfinancial structure are consistently identified as path-dependent influences of itssystem of “patient” rather than “speculative” financial capitalism.

This thesis revisits the historical evolution and crystallization of German corporatebanks on universal, as opposed to specialized, financial practices. In stark contrast to theexisting literature that relies on efficiency-based explanations, it emphasizes thepolitical nature of bankers’ financial practices, and the role of social power in shapingfinancial structure. Examining universal banking in this way stands its significanceupside down by showing its roots in speculative practices and the politics ofindustrialization rather than patient finance and efficient calculation.

The thesis consists of three parts: Part I delineates the intellectual riddle posed by thereceived scholarship: “despite obvious connections,” between economics and politics,orthodox political economists have been mystified by the role of power in universalbanking’s development. It therefore outlines an historical sociology of financialdevelopment to reassemble this puzzle. Part II charts the developmental path of Germanbanks from the 18th to mid 19th century. This section first stresses how early universalbanking—“mixed-banking”—was an unintended product of the speculative practices ofRhenish financiers engaged in a political struggle over industrialization. It furtherdemonstrates that the adoption of “mixed-banking” practices by corporate banks mustsimilarly be understood in terms of power rather than as a solution to market failure.Part III charts the historical narrative to 1914 highlighting how the early speculativecharacter of “mixed-banking” engendered a transformation into the concrete form ofuniversal banking following social struggles around the introduction of deposit banking.The thesis underscores the general importance of examining economic institutions fromthe perspective of power.